Cpe cashflow forecasting8/30/2023 Here are the forecasting periods we recommend and the business objectives they’re best suited for: So, choosing the right reporting period can have a big impact on the accuracy and reliability of your forecast. That means the further into the future the forecast looks, the less detailed or accurate it’s likely to be. Generally, there’s a trade-off between the availability of information and forecast duration. Once you’ve determined the business objective you hope to support with a cash flow forecast, the next thing to consider is how far into the future your forecast will look. But they may not have a need to build a forecast that supports short-term liquidity planning unless they’re also tight on cash. For example, businesses with debt will find value in creating a cash forecast that helps them prepare for payments they need to make. The right objective to build a forecast to support depends on the nature of your business. Growth planning: Ensuring the business has enough working capital on hand to fund activities that will help grow revenues in the future.Liquidity risk management: Creating visibility into potential liquidity issues that could arise in the future so you have more time to address them.Covenant and key date visibility: Projecting your cash levels for key reporting dates such as year, quarter, or month-end.Interest and debt reduction: Ensuring the business has enough cash on hand to make payments on any loans or debt they’ve taken on. ![]()
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